It doesn’t make sense for SANTACO to buy shareholding or invest in SA Taxi, which is owned by JSE-listed Transaction Capital.
In my opinion, it is a bad move to partner with this independent minibus taxi financier.
For more read: SANTACO Buys 25% Stake in SA Taxi for R1.7 Billion
This is not an emotive argument that simply says that SANTACO is not at liberty to make money or invest. Who am I to make such a judgement?
I have argued before in 2007, in my blog titled Gugled published by Fin24, that the minibus taxi industry should be floated on the JSE and ownership of the new company must reside with taxi owners and drivers, including other workers in the value chain. For more: Minibus Taxi Industry To be Floated on the JSE?
To free themselves, black South Africans need to use their buying power to create their own assets.
I know this is possible.
The minibus industry is widely regarded as a sleeping giant. It is defined as a R100 billion industry, with more than 200 000 vehicles and growing, employing more than 600,000 people, transports 15 million commuters per day, and accounting for 66% of the country’s public transport traffic.
The minibus industry on its own can create a black-owned bank, which could be worth millions if its run by some of the black professionals frustrated at the big four banks.
The same industry could also create one of South Africa’s biggest insurance and medical aid companies owned by blacks.
But now that seems to be a pipedream.
The South African National Taxi Council (SANTACO), which is a national body which represents the interests of its members who are individual minibus taxi operators, has teamed up with SA Taxi.
It has handed over the “family jewel” for a song to SA Taxi.
SA Taxi, with the backing of its parent company Transaction Capital, will milk the minibus industry. I bet you.
“With a united vision, the industry could launch a mutual bank at the blink of an eye. Of course, that’s easily said than done. The industry is dogged by violent fights for markets and control of its massive levy kitties. And it is disorganised and unprofessionally run,” my late friend Sibonelo Radebe, once wrote for Ujuh.
He added SA Taxi is unperturbed.
“It sees the potential and is going for it,” wrote Radebe.
As of September, SA Taxi had 30,617 taxis on its books, with loans and advances value of R9.4 billion.
Since 2008, SA Taxi has provided loans of more than R21.9 billion to taxi operators, supporting the creation of 72 423 SMEs, and more than 130 000 direct and 215 000 indirect jobs, explains Transaction Capital.
More broadly, by enabling taxi operators to replace old vehicles with new, safer and lower emission minibus taxis, SA Taxi assists in improving this critically important component of South Africa’s integrated public transport network, said the company.
Four months ago, SA Taxi in collaboration with Taxi Choice, the commercial arm of SANTACO, launched a fuel rewards programme – a precursor to launching a bank.
The operation launched Black Elite, the rewards programme card, on the back of a track record of financing minibus taxi operators.
It stated at the time that the Black Elite card has a huge potential to be converted into “a functional bank card”.
SA Taxi has distributed 6 300 Black Elite card to minibus drivers.
SA Taxi’s insurance business is the main driver of non-interest revenue, growing faster than the vehicle financing business. In 2018, the division’s gross written premium grew by 23% to R687 million, supported by broadening its client base and product offering. The business has 26 000 clients.
So, therefore, the move to bring on board SANTACO as a BEE partner is to tap into the black market, which is owned by the minibus industry.
I bet you, SANTACO will be the loser in this deal.
Would SANTACO members get big benefits from this deal with SA Taxi? I doubt it. I may be wrong, but I’ll state my case.
The deal will favour SA Taxi and might benefit the leadership of SANTACO.
I might be wrong but watch the space.
I hope will not be writing soon about “success fees” for clinching the deal with Transaction Capital paid to Phillip Taaibosch, the president of SANTACO, and his executive team.
SA Taxi claims that proportional ownership, allocated to SANTACO and a trust representing its broad-based provincial structures, will ensure that the economic benefits of this investment accrue to all levels.
Let’s cross our fingers and toes that this materialize.
On the other hand, in the medium-term SA Taxi stands to benefit immensely from the deal through the operational benefits expected from greater alignment with the minibus taxi industry, and the deal is expected to be earnings accretive to Transaction Capital.
So why is SANTACO buying into SA Taxi, a company that has been accused of ‘raping’ its members?
For more read: Taxi owners bled dry by credit costs
It’s difficult to pinpoint the main reason, why one of South Africa’s model of successful black economic self-empowerment vehicle – despite its faults – is being handed over to SA Taxi.
“We are trying to make the business of a taxi operator viable to himself, and then he would be able to meet his financial obligations,” Taaibosch told Business Insider South Africa on Tuesday.
But Twitter users were also not happy about the move.
What a shame! Black people are paying to buy a company they enriched!!! 🙈🙈🙈
— Lethu (@LethuMalimela) November 19, 2018
Then SANTACO is captured.
— Kingkazi. (@ThandoAfrika) November 19, 2018
If I was SANTACO and had access to R1.2bn funding I would rather go to Japan, buy these taxis myself and lease them to drivers instead of buying a stake in a loan shark. I think leasing is a more sustainable solution than buying taxis via greedy loan sharks
— Jalamba (@simphiw_) November 19, 2018
Again, I may be wrong, but what is clear is that SA Taxi has begun the process of conquering the minibus industry and is now indirectly owned by them. They will dictate what happens to the restructuring and development of this big industry, which remains one of the biggest thorns in the restructuring of public transportation in South Africa.
That said, SA Taxi is into this to beef up its empire.
“SA Taxi’s ownership transaction with SANTACO is expected to support growth in the finance, insurance and retail businesses, and unlock further opportunities to provide allied services within the broader taxi community, enabling a deeper penetration of the total addressable market,” SA Taxi disclosed on Tuesday.
I think it is all great move by SA Taxi to provide hope to the members of SANTACO. What lies ahead is whether the marriage between SANTACO and SA Taxi will last and change the face of public transport.
I will concede that perhaps some sort of victory has been attained by SA Taxi and we shall never as a South African public have a chance to see a bank, insurance, and medical aid company with FinTech solutions owned by the minibus industry.
But in a tumultuous country such as SA, and in such a swiftly changing political landscape – which continues to call for a state bank – we may one day see a black-owned mutual bank different from VBS Bank.